Internet E-commerce is one of the most complicated and confusing elements of running a commercial website. This page is aimed to explain most aspects of e-commerce. Some information may be overwhelming, so please take it in slowly.

It is very important to have some basic knowledge about the internet, web design and the processes involved. 

Terms to remember when reading this article: 

E-Commerce: Online payments for goods and services. 
Shopping Cart: The software used on your website to collect customer product orders. 
Merchant Facility: The mechanism where funds from the customer’s credit card are deposited directly into your bank account. 
Credit Card Fraud: Where someone has gained access to credit card details and illegally uses it to purchase goods. 

We are going to break this page into several sections:
1. E-commerce Software and Web Design
2. Credit Card Processing and Banks
3. Credit Card Fraud

1. E-commerce Software and Web Design

We're starting with the hardest part and sometimes the most neglected, least thought out element of running an e-commerce website. 

Are you planning to build the website yourself? If you are, then I assume you have an in depth understanding and technical knowledge about web design, html code and web hosting servers. Everyone needs to operate on a budget so it's understandable that you would prefer to save some money by creating the website yourself, however if you have not designed a website before, especially an e-commerce website, then it is recommended that you contact a web designer who has experience with e-commerce.

Another alternative is to use professional e-commerce software designed specifically to enabled your website for e-commerce. Many of our customers use EziMerchant. There are lots of other commercial software products on the market. Do a search on the internet for "shopping cart software".

One of the most popular and free shopping carts available is OScommerce. Plenty of our customers use this software on our servers. OScommerce requires a bit more knowledge about web design, but is still relatively easy to install.

2. Credit Card Processing and Banks

When a customer's credit card is charged, the funds must be transferred into your bank account. So how does this happen?
Without going into too much technical detail, the customer's bank needs to receive a request for those funds to be taken out of the credit card. This request is given by a Merchant Facility which is operated by a bank.

Merchant Facilities

As a business owner, you need to decide whether you want to have full control over payment processing, or if you are happy to delegate the responsibility to a 3rd party.

Option 1 - process payments through a 3rd party facility.

Processing payments through a 3rd party is where a company allows you to process payments through their own Merchant Facility. Most 3rd party facilities take a small percentage fee off the transaction amount. Some also charge a small fee per transaction.
The advantage of using a 3rd party is that you don't have to go through the application process to gain your own Merchant Facility. However, the disadvantage is that you are putting significant trust into a 3rd party business who controls the money you earn. They may pay you daily, weekly or monthly.

Advantages: 

• Cheapest and easiest to implement. 
• You can fully manage and view customer transactions.
• Some have good fraud management systems in place. 
• Secure server certificates are enabled at the industry standard.   

Disadvantages: 

• Money is processed by the 3^rd party outsourced company and customers make payments to this outsourced company. They then pay the money back to you after deducting fees and charges. 
• Most of these 3^rd party companies are overseas and support can be difficult or limited to email. 
• You may have to accept payments in $US dollars.  

Normally this option has higher transaction fees than having your own merchant facility, resulting in being a costly option if you are processing a high volume of orders. Example company’s which offer this service:

• 2checkout
• Paypal
• Authorizenet
• World Pay

Option 2 - maintain full control and processing.

To maintain full control and processing, you will need a Merchant Account with a bank. Most banks will ask you to submit a full Business Proposal and an annual profit estimate to ensure that your business will be viable on the internet. This can sometimes be a difficult process, so please consult your bank. DirectOne have compiled a list of bank contacts. [ Click Here to View The List ]

A partially outsourced option where you have your own merchant facility, however another company handles the credit card processing.   

Advantages: 

• Preferred system for better business practice of accepting credit cards via your web site. 
• Your customer pays into your bank account via your merchant facility. 
• Individual transaction cost is likely to be cheaper. 
• Australian based service with local support are available.   

Disadvantages: 

• You must have your own merchant facility with your bank and often it can be difficult to obtain. 
• Set up fees is typically more than Option 1.   

We recommend the following Australian company: 

• DirectOne / Securepay

As far integrating your chosen payment gateway with your website, both options require a high level capability in html and web site administration. 

Option 3

Alternatively if you don’t want to get involved on that level or can’t justify the effort & expense, then you can simply offer cheque or money order payments, and no credit cards. 

You can simply create a form with a list of your products. The user could select 1 product from a dropdown menu, or several products using checkboxes. You could include a script that will automatically calculate the prices. Once the form is submitted, an email is sent to you with the order information. The visitor is then shown a page which says, eg:

"Thank you for ordering. We have received your order for [{x_product}]. Please make cheques payable to 'So and So Company' for $[{x_amount}].

Post to: etc etc etc"

Phorm is a great form processor for PHP. Please consult a web designer with programming experience.

New Services

Value Hosting Australia now provides secure certificates for all VHA customers to purchase and utilise with their websites. 

A Secure Certificate allows you to process credit card information on your website in an encrypted form. The advantage of this is that visitors will feel safe to give you their information.

Depending on your budget or requirements, we offer Shared Certificates or Full Certificates.

For more information, please visit Secure Vault.

3. Credit Card Fraud

Credit Card fraud has been around since Credit Cards became popular in the 1970's. Fraud has proliferated on the Internet due to anonymity and the speed of information transfer.

The 2 most common forms of fraud that occur via internet transactions are:
1. The crook orders products using a stolen Credit Card.
2. The crook uses their own Credit Card to purchase products with no intention to ever pay for the good in the end.

Unfortunately, Credit Card fraud is here to stay, but there are several things you can do to avoid fraudulent transactions from being processed through your business.

1. Never never never accept orders from Nigeria, Ghana or any 3rd world country. This is a sad case where the local governments in those countries are powerless to stop fraud.

2. If possible, try confirm purchases via telephone or email. If the phone number or email address given is invalid, this is a warning sign.

3. If applicable, ask for the security code on the back of the Credit Card.

4. If the name on the Credit Card does not match the name given when purchasing the product, this is a warning sign.

5. If the credit card details seem to be an obvious 'cut n paste', this is a warning sign too. 
eg, the cardholder name might look like: "John      F.  Smith"
The spaces in the name are a give away. It's obvious that when someone is legitimately typing in their card details, they will not type in several spaces between their name.

6. If possible, do not allow automatic Credit Card charging. If you can use a facility that allows you to confirm each transaction, you can easily eliminate fraud by discarding dodgy purchases and only confirming legitimate transactions.

Conclusion

If your business is small, and you don't anticipate many transactions then Option 3 is recommended combined with our Secure Vault service. 

If you plan to do several transactions every day, or plan to expand your business then don’t hesitate to implement your payment gateway to a level which is the most professional and gives you the most autonomy over your online payment system. With this in mind, Option 2 is recommended.

Option 1 is the money-saver, while still having the advantages of online payments.